2005 (12) TMI 302 - AT - Customs

Summary

Issues:
Penalty imposition on exporting firms for overvaluation of goods under DEPB credit scheme. Justification of penalty amount. Imposition of personal penalty on the Proprietor of exporting firms.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi pertains to three appeals challenging the penalty imposed on two exporting firms and the personal penalty on the Proprietor for overvaluation of goods under the DEPB credit scheme. The appellants accepted the charge of overvaluation and misdeclaration of goods during the investigation. The DEPB benefit for the goods was approximately Rs. 1.44 lakhs, and the Proprietor admitted not claiming around Rs. 9 lakhs DEPB benefit for previous exports. The contention raised was that the total DEPB benefit was Rs. 10.44 lakhs, and imposing a penalty of Rs. 10 lakhs on each firm and the Proprietor was unwarranted, seeking a reduction in penalty.

The Tribunal considered the arguments presented by both sides, including referring to a Larger Bench decision upheld by the Supreme Court regarding the imposability of penalties. The total DEPB credit benefit for the shipping bills filed was Rs. 10.44 lakhs. While the appellants did not challenge the merits, they requested considering the genuine nature of previous exports where DEPB benefit was foregone. The Tribunal reduced the penalties on the exporting firms from Rs. 10 lakhs to Rs. 4 lakhs each, taking into account the overall facts and circumstances. However, the imposition of a penalty on the Proprietor was deemed unjustified as penalties cannot be imposed on a Proprietary firm and its Proprietor as per established law. The Tribunal also set aside the recovery of DEPB benefit as a penalty since the appellant did not claim it, along with nullifying the penalty on the Proprietor.

In conclusion, the penalties on the exporting firms were reduced, the penalty on the Proprietor was set aside, and the recovery of DEPB benefit as a penalty was annulled based on the specific circumstances and legal principles governing penalty imposition in such cases. The judgment was pronounced on 13-12-2005 by the Tribunal.